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Should a rich speeder pay more?

By Karen Aho

CarInsurance.com

Updated Tue Oct 4, 2011

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Think you could ever empathize with a multimillionaire in a Ferrari busted with his foot to the floor?

You might if that driver were stopped in a place like Finland or Switzerland, two in a growing number of European nations that consider a driver's income when tabulating the cost of a traffic ticket. In the U.S., a habitual leadfoot has more to fear, financially, from his car insurance company than he does from Officer Bob.

Law enforcement in Europe goes right for the wallet.

Consider the 2009 penalty for a villa owner whose personal wealth exceeded $20 million: $300,000 for driving his Ferrari Testarossa 85 mph through a Swiss village, at the time the largest speeding ticket in the world.

But the man held the record only briefly. The next year, a Swedish multimillionaire clocked at 180 mph in his new Mercedes Benz on a Swiss highway was expected to take home a $1 million fine.

Maximum fines are permitted to go even higher in Germany, to $16 million.

The graduated penalty structure dates back nearly 100 years in Nordic countries and is not restricted to traffic offenses. In recent years, the system has been adopted in France, Austria, Germany and Switzerland. How tickets are assessed varies. But, in general, authorities determine the severity of the offense and multiply the ticket by some measure of the driver's income.

In the U.S., penalties depend on where you speed, not how much you make. Maximum fines for first-timers run from $50 in Tennessee to $2,500 in Virginia and Illinois, according to the National Highway Transportation Safety Administration (NHTSA).

A $300 fine represents a little over three minutes of earnings for LeBron James, who took home $45.7 million in 2010. But someone earning minimum wage would have to work a week.

‘The system is very democratic’

In Finland, headline-grabbing tickets are old news. Speeding and other petty crimes have long been met with “day fines” -- a penalty equal to a day’s income, minus a few deductions for children and living expenses. Finnish police tap the country’s tax database, use those records to calculate a day fine, then levy the appropriate number of day fines for the offense.

Both the heir to a sausage fortune and a Nokia executive received $100,000-plus speeding tickets in the early 2000s.

One Finnish hockey player, fined $39,000 for causing an injury crash, threatened to leave the country. The executive of a wood-products company, outraged after nearly $60,000 in fines, called it "legalized robbery by police," adding, "I'm surprised they're not authorized to shoot you, too."

But voters hardly appear sympathetic.

In Finland, surveys show that 80 percent of citizens support a graduated fine structure. When a legislator introduced a bill in 2000 to cap most speeding tickets at $8,000, she received support from only 29 of 200 lawmakers, according to reporting in The Wall Street Journal.

"The system is very democratic," Heikki Summala, a professor at the University of Helsinki, told U.S. News and World Report. "Huge fines are not common, and the people who get them generally accept it, because they have the money to pay for it."

It plays in Oslo, but how about Peoria?

Some Americans gravitate toward this definition of fairness. As reader 'David S." posted on a conservative blog on the topic:

"I say bring on progressive fines. It's about deterrence. Make the fine big enough to impact behavior by scaling it to income, and the law works better."

But try to find a serious proposal to do the same here and bets are excellent that you'll come up dry.

"We have never really looked at it," says J. Peter Kissinger, president and CEO of AAA's Foundation for Traffic Safety of AAA, when asked about a progressive fine structure.

"I've never heard of that," says Ted Hollander, a lawyer who's been handling traffic cases for 15 years.

"I don't see anybody in this country going for something like that," says Dwight A. Hennessy, an associate professor of psychology at Buffalo State College who specializes in traffic culture. "Isn't that part of the North American mentality? That we're all created equal and should be treated equally?"

In the U.S., only income taxes are progressive. Judges surely consider an accused's assets when setting bail, and a defendant's ability to pay during the somewhat subjective sentencing phase. But for the most part, fines are set at a flat rate, as are so-called sin taxes. Rich and poor alike pay the same $1 a pack for federal tobacco taxes, the same 18 cents per gallon in federal gasoline tax.

"Next you may have groceries and gas priced according to income. Does a loaf of bread cost the same whether rich or poor?"

How much to slow down?

In the U.S., traffic fines have risen over the years, and it's well accepted that fines must be significant to change driver behavior. (The $5 speeding ticket in Montana in the 1980s was rightly seen as a state snub to the federal 55-mph speed limit mandate rather than an actual penalty, for example.)

Research by NHTSA found that when seat belt fines were raised from $25 to $60, seat belt use rose 3 percent to 4 percent. When fines were raised to $100, seat belt use increased 6 percent to 7 percent.

However, the greatest gains -- at 10 percent to 12 percent -- came simply by allowing police to stop drivers for seat belt violations, reinforcing widespread belief that it's enforcement that matters most.

"The likelihood of a ticket is a more crucial thing than the fine itself," says Russ Rader, of the Insurance Institute for Highway Safety.

Indeed, the fine attached to a speeding ticket could easily be dwarfed by the insurance penalty associated with it. Analysis by Insurance.com has found that a driver with a single speeding ticket typically is quoted auto insurance rates 18 percent higher than one with no tickets. Two tickets? 34 percent more. And a driver with three, a whopping 53 percent more. (See “The $5,000 speeding ticket.”)